Buying Smart in The United Kingdom

January 2002

By Henry S. Kenyon

New acquisition system increases over sight, speeds project delivery.

The British government is employing streamlined procurement procedures that change the way military projects are bid, selected and deployed. Moving away from traditional single-platform and service-based methods, the process utilizes a flexible approach that meets changing national defense requirements.

Acquiring new equipment and systems to replace aging ones is one of the functions of modern government. However, this process often becomes extremely complicated, with multiple channels of authority and complex customer-supplier relationships. These convolutions can result in cost and time overruns as programs become unwieldy because of a lack of oversight and accountability.

Similar issues spurred the U.K. Ministry of Defence (MOD) to change its old procurement methods and adopt a new approach called capability management. Part of a broader program called Smart Acquisition, the initiative was outlined in the 1998 Strategic Defence Review. A key part of Prime Minister Tony Blair’s Labor Party government when it came into office in 1997, the review analyzed Britain’s defense and foreign policy objectives and the capabilities required to meet the country’s needs. The report also outlined broad changes in military force structure and government procurement practices, explains Maj. Gen. Robert Fulton, Royal Marines, capability manager, information superiority, Equipment Capability Customer, MOD, London.

Smart Acquisition’s goal is to streamline the process of purchasing and replacing equipment by moving away from replacing one piece of equipment with a later model of the same. “The objective is to get the maximum capability out of every pound we spend on defense,” the general maintains. Capability management fits into this process by defining requirements, identifying potential solutions and their trade-offs, managing the design and manufacture of equipment, and then maintaining the material through its life cycle.

The general notes that capability management is driven less by the needs of specific services and more by national defense needs. “We don’t see the best way of optimizing investment in defense as simply replacing one piece of equipment as it comes toward the end of its life with another updated version of the same. We are trying to get away from being imprisoned by replacing a submarine with a submarine, an airplane with an airplane, a tank with a tank,” he says. Instead, by looking at the nation’s defense requirements as a whole, one piece of equipment may be replaced with an entirely new technology or a device that was not used in that specific manner before.

This outlook also is congruent with the creation of a number of joint force structures within the British military such as the Joint Harrier Force, which consists of Royal Air Force and Royal Navy aircraft; a joint helicopter command; and a joint nuclear, biological and chemical regiment. “The increasing move toward joint operations and structures meant that what they needed was a capability-based approach to acquisition that would support them and not just the existing single service structures,” Gen. Fulton observes.

Smart Acquisition and capability management were designed to replace the MOD’s old procurement system, which was suffering from increasing inefficiencies. Difficulties ranged from cost and time overruns on projects, increasingly complex and diverse equipment types, and global threats that required greater flexibility in the way equipment was designed and used. Under the old system, no single point of responsibility existed for a project. “There wasn’t a single clear customer for the equipment. Customer responsibilities were spread over different parts of the MOD, and therefore the different procurement processes were being managed separately by different people,” the general says.

The new methods analyze a program’s risk factors at an early stage, before major commitments are made. Also under the old system, funding was rigidly attached at the beginning of a project. This prevented the government from rapidly taking advantage of new technologies or business and industrial efficiencies. The new approach creates a more open relationship with industry by allowing the government to avail itself of new applications, technologies and processes throughout the course of a program. “We tried to streamline the project approvals process. We have not mandated—but certainly encouraged—investment in the early stages of a program to identify options and assess risks so we can manage them through a project, or indeed identify that a particular program may be too high a risk and not go on with it,” he says.

Involving industry in the early stages of a project is a key part of the new system. However, questions remain about the exact point in the process to include the private sector. “I wouldn’t describe it as a tension, but there is an issue over the involvement of industry in the collaborative and competitive parts of the process,” Gen. Fulton explains. Industry collaboration remains to be smoothed out because firms cannot afford to share ideas with potential competitors in the early stages of the procurement process. While the general believes there will always have to be a competitive element in the process where industry can provide the best solutions, he adds that Smart Acquisition is still a work in progress. “We are going down the right road, but there is more to be done to explore new ways of doing business with each other,” he says.

A cumbersome approval process created another impediment to speedy acquisitions. “There were too many stages where we had to go back for approvals, and finally there wasn’t any overall accountability for the delivery,” Gen. Fulton observes. The diffuse nature of the process meant that no single person was truly accountable for project delivery. One of the main tenets of the restructured procurement process is a clearly defined relationship between the customer and supplier. The general believes this demarcation lies at the heart of the initiative. By sharing responsibility, it is easier to identify trade-offs among areas such as system performance, whole life costs and ownership costs once the equipment is in service, he says.

Because the Smart Acquisition process is only about 18 months old, its impact on programs has yet to be fully determined. Although evidence of cost returns for programs under the new system will take some time to identify, an increasing number of projects are being delivered on time and programs in progress are keeping to development milestones, the general notes. The new customer-supplier relationship also allows industry to understand the government’s needs better. This will provide additional benefits in the future. “I think what we see at the moment are encouraging signs on the time front. But we have an expectation that this will also pay dividends in costs as well in due course,” he adds.

Although no major projects have moved from concept to delivery under capability management, one program that originated under the old system benefited greatly from Smart Acquisition. The Bowman project is the largest tactical communications program in U.K. history (SIGNAL, November 2001, page 41). When the project encountered significant difficulties, the MOD terminated the program and began a new competition under the new system. One year passed from the beginning of the competition until a contract was signed in July 2001 with Computing Devices Canada, a subsidiary of General Dynamics. Gen. Fulton believes that this is probably about as fast as this type of bidding process can go. “I do not think that we would have been able to get anything like that sort of performance out of the old system. Certainly, on this side [of the Atlantic], Bowman did not have a good reputation as a project. We now believe this offers Bowman the opportunity to become a flagship program for Smart Acquisition,” he says.